In response to concerns over Coinbase’s reserves, BlackRock has filed an amendment requiring Bitcoin withdrawals within 12 hours. The move aims to allay investor concerns and make the process of returning funds more reliable.
Rumors That Put Coinbase in Trouble
Bitcoin spot ETFs in the US now manage over 930,000 BTC, or nearly $60 billion. This represents a 50% increase in BTC held in these new financial products since the beginning of the year, taking into account that GBTC managed nearly 620,000 BTC before its conversion to a spot ETF.
In addition to the fact that the use of Bitcoin spot ETFs goes against the initial idea of BTC, their concentration, with Coinbase as the main custodian, is a weakness for the ecosystem. In the event of a hack or loss of funds by the platform, this could lead to a significant drop in prices.
📈 Everything you need to know about Bitcoin spot ETFs
A week ago, Rumors began circulating on social media accusing Coinbase of manipulating the price of BitcoinThe accusations, made by a user under the pseudonym Tyler Durden, alleged that Coinbase was issuing IOUs for Bitcoin held on behalf of ETF issuers.
In response to the allegations, Coinbase CEO Brian Armstrong vigorously denied the allegations, noting that the company's accounts are regularly audited by Deloitte. However, some skeptics have countered by comparing the situation to that of Lehman Brothers and FTX, which collapsed despite audits.
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BlackRock Responds to Rumors About Coinbase Reserves
In response, BlackRock, the world's largest asset manager and responsible for IBIT, the Bitcoin spot ETF with the most BTC under management, recently filed an amendment with the Securities and Exchanges Commission (SEC), requiring that withdrawals of funds be made within 12 hours of the request.
BlackRock's amendment states:
“Subject to confirmation of the minimum balance required above, Coinbase Custody shall process a withdrawal of digital assets from the custody account to a public blockchain address within 12 hours of receiving an instruction from the customer or the customer’s authorized representatives.”
📰 Also read in the news – Largest US custodian bank gets controversial SEC approval for cryptocurrency custody
Today, Coinbase is seen as a “too big to fail” company, managing more than 2 million Bitcoins, or nearly $130 billion, including about $44 billion for issuers of Bitcoin spot ETFs.and holding a total of $270 billion in assets for its retail clients.
Distribution of Bitcoins held by Coinbase
A Coinbase collapse or hack would have far-reaching consequences for the cryptocurrency ecosystem, potentially blocking funds for a long period of time, as was the case with FTX, whose funds are still frozen nearly 2 years later, or Mt. Gox, whose funds only began to be redistributed this year, 10 years later.
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Source: SEC
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First lured by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I have no choice but to share my knowledge and transmit the passion I have for Bitcoin. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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